EDWARD J. GIBNEY, )
vs. ) CASE NO. 81-1684
Respondent. )
This cause was heard pursuant to notice on August 26, 1981, in Sarasota, Florida, by Stephen F. Dean, assigned Hearing Officer of the Division of Administrative Hearings. This case arose on the denial of Petitioner's application for licensure as a real estate salesman by the Board of Real Estate pursuant to Section 475.25(1)(f), Florida Statutes, on the grounds that the Petitioner had been convicted of crimes which are felonies under the laws of the United States and the State of New Jersey.
For Petitioner: Larry H. Spalding, Esquire
For Respondent: Jeffrey A. Miller, Esquire
Department of Legal Affairs Administrative Law Section The Capitol, 16th Floor Tallahassee, Florida 32301
Petitioner Edward J. Gibney made application to The Board of Real Estate for licensure as a real estate salesman. The Board denied Petitioner's application pursuant to Section 475.25(1)(f), Florida Statutes, because he was convicted of crimes against the laws of the United States and against the laws of the State of New Jersey involving moral turpitude.
Petitioner pleaded guilty to the crimes of conspiring to commit fraud on medicaid and medicare claims, a felony under the laws of the United States. He also pleaded guilty to a similar offense which was a felony under the laws of New Jersey. Both offenses arose out of the same factual situation.
The sole grounds for denial of Petitioner's application were his criminal convictions and the matters surrounding them. The Petitioner is otherwise qualified for licensure.
After initial notification of the Boards intention to deny his application, the Petitioner requested and received an informal hearing before the Board. The Board notified Petitioner that it still intended to deny his application, and the Petitioner requested and was granted a formal hearing. The transcript of the Board's informal hearing was received as Petitioner's Composite Exhibit #1.
Petitioner was the only witness at the hearing. He explained very candidly the facts surrounding his entry of guilty pleas to the criminal charges brought against him. His testimony was uncontroverted and is accepted as true.
Petitioner, a graduate chemist, was qualified and licensed as a medical laboratory director in New Jersey. For 15 years prior to 1975, he owned and operated a small medical laboratory directly providing clinical laboratory services to private physicians.
In 1975, Petitioner was approached several times over a period of three months by Seymour Slaughtnick to provide laboratory services to several doctors for medicaid/medicare patients. Slaughtnick was functioning as an intermediary. Slaughtnick picked up test samples at the doctors' offices and transported them to another laboratory. Slaughtnick wanted to change laboratories because of the poor quality laboratory work. Although Slaughtnick's function was described, Slaughtnick's relationship with the other laboratory or the doctors was never defined. Petitioner described Slaughtnick as a salesman.
Petitioner initially refused the Slaughtnick offer because he had not done medicare/medicaid work and did not know how to process the paperwork. Slaughtnick continued to press Petitioner for a commitment to do this work and offered to prepare and submit all the paperwork for Petitioner. Slaughtnick and petitioner eventually agreed to an arrangement under which Slaughtnick picked up the samples, brought them to Petitioner's laboratory, transmitted the test results back to the physicians, and prepared Petitioner's billings to medicare/medicaid for the professional services rendered. Petitioner performed all the laboratory work as ordered by the physicians and prepared all test results, paying Slaughtnick a percentage of the fee for each test for his services. Petitioner was aware that his arrangement with Slaughtnick and permitting Slaughtnick to bill in his name was illegal under New Jersey law.
To assure himself that Slaughtnick's billings were in order, Petitioner checked on Slaughtnick's billings after they began to work together. The State of new Jersey's medicaid/medicare plan was administered by Prudential Insurance Company using a blind fee schedule. Petitioner was advised by Prudential that his schedule initially provided various fees for various laboratory tests, but laboratories would not be advised of the amounts of payment or criteria used for assessing the appropriateness of ordering the tests. He was advised Prudential would reject any billings that were inappropriate.
In 1976, the State of New Jersey began an investigation of its entire medicare/medicaid system. Initially, the inquiry with Petitioner's laboratory centered on whether he was performing the work ordered. It was determined that Petitioner performed all the work for which he billed the state.
This investigation gave rise to an administrative complaint against Petitioner that charged him with overbilling. An administrative hearing was conducted which lasted eight months, during which 55 days of testimony were taken. The New Jersey hearing officer eventually that 50 percent of the orders and billings were correct; however, before the administrative order was entered, the Petitioner was indicated by the state of New Jersey and the United States for conspiracy to defraud under medicaid/medicare.
The indictment alleged that Petitioner, Slaughtnick and other unnamed co-conspirators had conspired to defraud medicaid and medicare. The indictment was not introduced at this hearing; however, the Petitioner explained it alleged that the conspirators arranged to order more complex tests than were necessary, performed these tests, and then billed the state for the inflated service.
Petitioner denied any knowledge of such a scheme to inflate test orders, however Petitioner did admit that his permitting Slaughtnick to prepare bills to medicaid and medicare in the laboratory's name was not authorized under the New Jersey law.
Petitioner also denied knowledge of any kickbacks paid by Slaughtnick to any of the physicians or those in their employment. However, Petitioner stated he had no doubt after the fact that Slaughtnick was engaged in such a practice.
Since his release from probation slightly more than 18 months ago, Petitioner has studied real estate and attempted to recover from the strain of the loss of his business, the long hearing, and his conviction and sentencing.
The facts upon which this case are based occurred in 1975-76. Petitioner was sentenced in 1977, and has been released from confinement and probation since January, 1980. There is no evidence that petitioner has engaged in any conduct that would reflect adversely on his character since he terminated his laboratory work for medicaid/medicare in 1976.
CONCLUSIONS OF LAW
The first issue raised in this case is: (a) Can the Board of Real Estate consider matters surrounding the offense to which a person pleads guilty in determining whether that person processes the necessary character to be a licensee?
The Board is authorized by Chapter 475, Florida Statutes, to license real estate salesmen, and pursuant to that authority it has jurisdiction to determine whether or not the applicant is qualified.
Section 475.17(1), Florida Statutes, provides that an applicant shall be of good character and have a reputation for fair dealing. This section further provides that if an applicant has been guilty of conduct or practices in this state or elsewhere which would have been grounds for revoking or suspending his license under chapter 475 had the applicant been licensed, the applicant shall be deemed not to be qualified.
Section 475.(1)(f), Florida Statutes, provides that the Board may suspend the license of a licensee if it finds that the licensee has been found guilty of a crime against the laws of this state, any other state, or of the United States which involves moral turpitude, fraud or dishonest dealing. A record of conviction certified and authenticated in such a form as to be admissible as evidence under the laws of the state shall be admissible as prima facie evidence of such guilt. (Emphasis supplied.)
The language emphasized refers back to the guilty finding made by the court. In this case, both the records introduced of the conviction and the testimony of Petitioner reflect that the Petitioner was found guilty of the offense of conspiracy to commit fraud under medicaid/medicare, which is a crime against the laws of New Jersey and the United States. By virtue of this fact, the provisions of Section 475.17 discussed above come into play, and the Petitioner is deemed not to be qualified unless because of the passage of time and subsequent good conduct and reputation, or other reason deemed sufficient, it shall appear to the Board that the interest of the public and investors will not likely be endangered by the granting of registration. (Emphasis supplied.)
Under the authority granted to the Board by the language of Section
475.17 emphasized above, the Board may consider the matters surrounding an offense to which an applicant's character and reputation.
The second issue in this case is (b) What is the evidentiary effect of the pleas of guilty by the Petitioner to two felonies?
The evidentiary effect of a plea of guilty was discussed in the case of Hatfield v. York, 354 So.2d 426 (4 DC, 1978). In this case, Hatfield sued York in a civil action to recover damages for assault and battery, false arrest, and malicious prosecution. The trial court dismissed all three counts with prejudice because Hatfield had pleaded guilty to assault and battery, resisting arrest and indecent exposure. These were the same criminal charges Hatfield alleged were maliciously instituted by York.
The appellate court said that the guilty plea was admissible in a civil action where one of the issues is the guilt of a person convicted of a criminal offense or some fact necessarily involved in the determination of guilt. The guilty plea is an admission against the interest of the person entering the plea. However, it does not, as a matter of law, establish the truth of the fact upon which the judgement of guilt was entered. (Emphasis supplied.)
Based upon this statement of the law, the appellate court held that the trial court's dismissal with prejudice of the count alleging malicious prosecution was proper because an essential element of malicious prosecution is a bona fide determination of the original charges in favor of the criminal
defendant, now plaintiff. Hatfield's plea of guilty was prima facie evidence that this charge was not resolve din his favor.
In the instant application case, the Petitioner's plea of guilty together with certified records of the court's finding of guilt are prima facie evidence that the Petitioner was found guilty of a felony offense. If a criminal court found the Petitioner guilty, then Section 475.25(1)(f), Florida Statues, applies, and the Petitioner is deemed unqualified unless he can show to the boar that by the passage of time, subsequent good conduct and reputation, or some other reason deemed sufficient he is not a danger to the interest of the public or investors. The effect of the guilty plea in consideration of Petitioner's reputation, etc., is similar to the effect of Hatfield's guilty pleas on the remaining counts of Hatfield's complaint.
Regarding the counts of false arrest and assault and battery, the appellate court in Hatfield, supra, held the trial court improperly dismissed them. In spite of the guilty pleas, Hatfield might still be able to present evidence from which a jury might conclude he was the victim of an assault and battery and false arrest.
Analogously, notwithstanding Petitioner's pleas of guilty, Petitioner might present evidence form which the Board could find that Petitioner would not likely endanger the interest of the public or investors. Therefore, evidence of Petitioner's guilty plea would be admissible as an admission against interest, together with the other evidence presented by both parties on the issue of Petitioner's reputation. However, the plea of guilty does not prevent the Petitioner from introducing evidence showing his good character or in mitigation.
Considering the last issue, that of Petitioner's qualification for licensure in light of his convictions, the facts do not reveal any data concerning Petitioner's current reputation in the community. No witness appeared or testified on this issue. Petitioner testified that he is not currently employed, and there would be no recent employment history to consider. The record does not reflect that Petitioner has engaged in any illegal practices since 1977, and he has engaged in no illegal activities since his release form probation in early 1980.
The Petitioner did offer evidence which explains or mitigates his participation in the crimes to which he pleaded guilty. Petitioner's explanation as credible, and he answered all questions about the circumstances leading up to his conviction with candor. Based upon what Petitioner related, it can be concluded that Petitioner agreed with Slaughtnick to do something prohibited by New Jersey law because it was more convenient for him. Petitioner was guilty of engaging in a conspiracy with Slaughtnick and, by giving Slaughtnick free rein to bill in his laboratory's name, became criminally liable for all that Slaughtnick subsequently did. However, Petitioner did not seek or intend to received illegal profit or gain. The Petitioner's criminal intent under the circumstances is legally inferred. In considering Petitioner's character and reputation, it would not be accurate or appropriate to consider his acts on a par with one who with malice and forethought intended to defraud another.
Given the total record, however, the Hearing Officer cannot recommend licensure at this time due to Petitioner's lack of evidence of good reputation and lack of evidence of Petitioner's general activities since being released from probation. Although several years have passed since Petitioner engaged in the activities which gave rise to his conditions, Petitioner's general lack of employment activity during this time has not created a record from which Petitioner's character and business reputation can be assessed.
Based on the foregoing findings of fact and conclusions of law, it is recommended that Petitioner Edward J. Gibney be denied licensure upon the specific ground that under Section 475.17(1), Florida Statutes, he failed to present sufficient evidence of his reputation in the community to assure the Board of Real Estate that the interest of the public and investors would not be endangered unduly.
DONE and ORDERED this 14th day of October, 1981, in Tallahassee, Leon County, Florida.
STEPHEN F. DEAN, Hearing Officer Division of Administrative Hearings The Oakland Building
Filed with the Clerk of the Division of Administrative Hearings this 14th day of October, 1981.
Larry H. Spalding, Esquire 6360 South Tamiami Trail Sarasota, Florida 33581
Jeffrey A. Miller, Esquire Department of Legal Affairs Administrative Law Section The Capitol, 16th Floor Tallahassee, Florida 32301
Carlos B. Stafford, Executive Director Board of Real Estate
